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How long before your home turns a profit?

Have you owned a piece of real estate in Australia for a few years, but find yourself unsure whether it is the right time to move on? Even if you never intended it to be, buying a home is an investment and can be a great way of building wealth and securing your future.

The Australian Securities and Investments Commission (ASIC) affirms that property is considered to be one of the safest options when it comes to money-making ventures.

Investors and home buyers have been receiving significant profits of late

The recent Pain and Gain report from CoreLogic RP Data revealed that investors and home buyers have received significant profits of late. In fact, just 9.1 per cent of homes resold over the June 2015 quarter were done so at a loss, meaning 90.1 per cent of Australians may have made a profit.

“We’ve seen the proportion of loss-making resales continue to trend lower over recent months which are mirroring broader housing market conditions where values generally continue to rise,” said CoreLogic RP Data Senior Research Analyst, Cameron Kusher.

Of course, this isn’t to mention the astonishing 30.8 per cent of homes that sold for more than double their purchase price! So, if you own a home or are considering having a look at property for sale, how long before your home turns a profit?

In it for the long-haul

The ASIC asserts that given the relatively high entry and exit expenses (including the price of the home, stamp duty, capital gains tax and additional legal fees), property investment provides the best benefits over the long term.

The findings from the Pain and Gain report reflect this, as the average period of home ownership required to make a profit when selling was nearly 10 years – the homes for sale that doubled their value were generally held for around 16 years before selling.

The total profits amassed over the quarter amounted to around $16.1billion, which equals an average take of $259,174 per owner. Not bad!

Despite this, it is important to note that these figures are national averages and don’t depict the individual state markets – which only highlights the importance of doing your due diligence.

For example, according to SQM Research, combined capital city prices rose 9.8 per cent over the 12 months to June 2015. Focus a little deeper, and you will see that Sydney’s prices skyrocketed 18.9 per cent, leaving Melbourne in a distant, though respectable, second place with 7.8 per cent.

If you are thinking of selling or are considering making a move on property for sale, you should speak with a real estate agent.